Why Choose a Fixed-Rate Plan?

With many options to choose from, we want to help you understand the different types of energy plans so that you can make an informed decision to enroll with a supplier like AEP Energy. If you live in a deregulated state, energy choice makes it possible for you to shop for and select a supplier with an energy plan that works for you. In this blog, we will explain the difference between fixed-rate and variable-rate plans and explore the pros and cons of each.

What is a fixed-rate plan?

When you enroll in a fixed-rate plan, the price per kilowatt-hour (kWh) will remain the same for the duration of your contract. While your energy usage may go up or down depending on seasonality, this will give you certainty that your price will not change during the term of the agreement and makes budgeting easier. Therefore, if energy prices go up, you can enjoy the peace of mind that comes with knowing your rate will remain locked in at the agreed upon amount.

Likewise, if market prices fall, your rate will remain at the fixed price. However, at AEP Energy, we believe our customers should have access to all our offers, including offers available to new customers. So, if you happen to see a better rate in your service territory, you can either call one of our customer care representatives at 1-866-258-3782 or login to your online account portal to simply make the change to a different fixed-rate plan.

And because we don’t believe in charging early termination or hidden fees, as an AEP Energy customer, there will be no penalty for leaving your current plan and switching to the new one. It’s a win-win!

What is a variable-rate plan?

Variable-rate plans can be complicated. The rate is not fixed or locked-in, which means the price per kilowatt-hour (kWh) can change according to the supplier’s terms and conditions. Typically, the price you pay with a variable-rate plan is determined by the changing cost of the energy market, along with other factors.

If the cost of energy goes down, the variable rate will likely go down. However, if the cost of energy goes up, so will price per kWh you pay. If you follow energy market prices and adjust your electric usage accordingly, you may save money. On the other hand, during extreme hot or cold temperatures, electric prices may increase dramatically, which may increase your price per kWh. In addition, extreme temperatures may increase your electric usage, which further increases your bill. If you haven’t switched to a fixed-rate plan with an energy supplier, like AEP Energy, you may likely be on a variable-rate plan through your local utility.

In summary

Let’s review the pros and cons of each:

  • Pros of a Fixed Rate Energy Plan
    • Peace of mind because rate remains the same
    • Extreme weather won’t impact prices
    • Budgeting is easy with fixed rate
  • Cons of a Fixed Rate Energy Plan
    • If energy costs drop, you may miss out on savings
  • Pros of a Variable Rate Plan
    • If the cost of energy is low, you may save money
  • Cons of a Variable Rate Plan
    • Local energy prices can rise at any time, increasing your rate
    • Extreme weather can impact rates
    • Budgeting is a little more difficult with fluctuating rates

Visit our website to learn more about AEP Energy or the variety of fixed-rate plans we offer. You can also find more information about shopping for energy plans at the Public Utilities websites for our service territories in Illinois, Maryland, New Jersey, Ohio and Pennsylvania.

AEP Energy does not guarantee the accuracy, timeliness, suitability, completeness, freedom from error, or value of any information herein. The information presented is provided “as is”, “as available”, and for informational purposes only, speaks only to events or circumstances on or before the date it is presented, and should not be construed as advice, a recommendation, or a guarantee of future results. AEP Energy disclaims any and all liabilities and warranties related hereto, including any obligation to update or correct the information herein. Summaries and website links included herein (collectively, “Links”) are not under AEP Energy’s control and are provided for reference only and not for commercial purposes. AEP Energy does not endorse or approve of the Links or related information and does not provide any warranty of any kind or nature related thereto.

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